Bank Leumi (TASE: LUMI) will not extend its $125 million line of credit for the Gazit-Globe Ltd. (NYSE: GZT; TASE: GZT; TSX: GZT) real estate investment company. This line of credit, originally granted for buying shares in its overseas subsidiaries, is due to expire next month.
Bank Leumi declined to comment on the matter, saying that it did not discuss its customers' business.
Gazit-Globe previously had a $365 million line of credit from Bank Leumi, reduced to $250 million in June 2014. In September 2015, Gazit-Globe reported that it was taking steps to reduce its Bank Leumi line of credit, and notified the bank three months later that it would not use more than $125 million of this credit.
At the same time, Gazit-Globe noted that as of its report last December, the line of credit was not being used, and it was negotiating with Bank Leumi to extend it, with a reduced sum of $125 million. Nothing has been reported in the matter since, however, and it appears that disputes between the parties have emerged concerning the terms for the line of credit.
Bank Leumi does not wish to maintain any line of credit whatsoever for Gazit-Globe, but Israel Discount Bank (TASE: DSCT), its competitor, agreed in early January to increase its line of credit to the company from $200 million to $275 million. Earlier, in September 2015, concurrently with its report about Bank Leumi, Gazit-Globe reported that US bank Citibank had increased its line of credit to Gazit-Globe by $85 million - from $125 million to $210 million, and that another bank had granted the company a $75 million line of credit for 30 months.
In total, Gazit-Globe's additional credit amounts to $235 million, against the loss of $250 million in credit from Bank Leumi. Discount Bank is also part of a banking consortium, together with Bank Hapoalim (TASE: POLI) and Union Bank of Israel (TASE: UNON), that granted Gazit-Globe a €194 million loan for the acquisition of Atrium European Land Ltd. (ATX: ATR; Euronext: ATRS), a company that operates shopping malls in Eastern Europe.
The Gazit-Globe share price today responded to the news by falling 3% to a price reflecting a market cap of NIS 6.35 billion. In response to today's media reports on the subject, Epsilon Investment House Ltd. analyst Ben Novo Shalem wrote, "In our view, this is groundless media spin." Value Base analyst Shay Lipman stated, "It is worthwhile taking advantage of the decline in the paper following the report."
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2016
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